Credit and debt appear to be natural, permanent facets of Americans'
lives, but a debt-based economy and debt-financed lifestyles are
actually recent inventions. In 1951 Diners Club issued a plastic card
that enabled patrons to pay for their meals at select New York City
restaurants at the end of each month. Soon other charge cards (as they
were then known) offered the convenience for travelers throughout the
United States to pay for hotels, food, and entertainment on credit. In
the 1970s the advent of computers and the deregulation of banking
created an explosion in credit card use--and consumer debt. With
gigantic national banks and computer systems that allowed variable
interest rates, consumer screening, mass mailings, and methods to
discipline slow payers with penalties and fees, middle-class Americans
experienced a sea change in their lives.
Given the enormous profits from issuing credit, banks and chain stores
used aggressive marketing to reach Americans experiencing such crises as
divorce or unemployment, to help them make ends meet or to persuade them
that they could live beyond their means. After banks exhausted the
profits from this group of people, they moved into the market for
college credit cards and student loans and then into predatory lending
(through check-cashing stores and pawnshops) to the poor. In 2003,
Americans owed nearly $8 trillion in consumer debt, amounting to 130
percent of their average disposable income. The role of credit and debt
in people's lives is one of the most important social and economic
issues of our age.
Brett Williams provides a sobering and frank investigation of the credit
industry and how it came to dominate the lives of most Americans by
propelling the social changes that are enacted when an economy is based
on debt. Williams argues that credit and debt act to obscure, reproduce,
and exacerbate other inequalities. It is in the best interest of the
banks, corporations, and their shareholders to keep consumer debt at
high levels. By targeting low-income and young people who would not be
eligible for credit in other businesses, these companies are able
quickly to gain a stranglehold on the finances of millions. Throughout,
Williams provides firsthand accounts of how Americans from all
socioeconomic levels use credit. These vignettes complement the history
and technical issues of the credit industry, including strategies people
use to manage debt, how credit functions in their lives, how they
understand their own indebtedness, and the sometimes tragic impact of
massive debt on people's lives.
